What is a PEO firm? What are the advantages and the disadvantages?

A professional employer organization is an Outsourcing company that tries to share employee-related responsibilities with the company. They usually tried to provide access to the latest pool of candidates to a company over the period for the specific accomplishment of the projects. In addition, they also undertake the responsibility to fulfill different obligations of the companies related to the Employees. This can be concerning the compensation claim or for the payment of the provident fund. 


It is one of the most important objectives usually fulfilled over some time. This is an important organization that plays the role of a third party to mitigate the differences and lapses in the organization’s functioning to perform the activities of recruitment. Professional employer organization allows the company to generate a huge amount of Return. They try to allow a company to focus only on the primary activities of profitability. They take up the responsibility to perform the non-core business activities, which, despite being important, are not profitable. 


This particular organization can have certain features and characteristics within itself. The list of the same has been given in the following way. 

Acts an outsourcing agency

This organization is not a part of the internal management of the company. It is a third party that is delegated the responsibility to provide and supply prospective and talented candidates to the company. This is a kind of outsourcing agency that performs the internal administrative functions of the organization on behalf of the company itself. 

This third party can perform a lot of Administrative and staff, and related work on behalf of the company. It allows the company to focus on more important profit-making objectives and sustainability in the market.

Works for a fees

Since it is not an organization employee, it does not require a monthly salary. This organization functions following the payment of a monthly or an annual fee. It is a professional organization that provides services to the company. It is technically a kind of service provider for the company only. 

It usually saves a huge amount of Expenditure for the company. If the company can recruit a human management team, it has to pay a monthly salary. This would increase the cost of Expenditure. 

Pool of candidates

It is also important to mention that these third-party organizations have a huge pool of candidates with themselves. All of them are considered to be prospective candidates. These prospective candidates have different expertise and scales in them. 

That is why it becomes extremely important for the agency to shortlist the talent following the specific need of a company in such a situation. For instance, If a company has candidates in the marketing team, such services must be provided accordingly. 


The list of the advantages this particular company can have and provide to other organizations has been given in the following ways. 

Helps in recruitment and hiring

It is important to mention in the first place that the company helps to provide the correct talent to the organization. It is the form of the correct talent that a company needs to fulfill its goal. It is considered important for finding the correct candidates that have the potential to fulfill the company’s objectives. Close contact with all the important sources of employment. 

Administration assistance

Peo firms in Saudi Arabia also try to provide a huge amount of Administrative assistance. They try to perform important activities like filing the forms with the government. It undertakes all the activities related to compliance with different regulatory bodies. It also helps to manage the payroll requirement of a company. 

All the other employment-related matters like payment of provident fund and other social security benefits are also covered under their Ambit only. It will have a sufficient amount of importance in the long run. 


The list of the disadvantages has been given in the following way. 

Loss of control

It is important to mention that since staffing and recruitment are an essential part of the company, delegation of the same to a third party like peo firm results in the loss of control. It is not acceptable for the company because employees constitute one of the essential parts of the company.

 It is only because of the employees that a company functions. But if the employees were in the control of a third party, it would be detrimental to the company’s functioning. 

Outsider influence

Since the employees of a company these recruitment agencies have recruited maintain close contact with them, they can easily get influenced. In such a situation, they can even try to disrupt the organization’s functioning or leak important trade secrets to third parties. That is why control must be exercised on them in the long run. 

This can be avoided by limiting the involvement of the recruitment agency after the recruitment process has culminated. The organization should establish contact with the employees all by itself after that. This would be definitely helpful to limit the outsider influence and also avoid unwanted situations in the company. The PEO firm handles a lot of things for a business. All you need is the right mind to handle your tasks, and these PEO firms make it better for you. Being a business owner, you just cannot handle everything alone, and this makes it more important to have a team that can handle your tasks. The PEO firms act as a guide and also show the right path of handling the matters. 


It can be ultimately concluded that this is one of the best ways in which the proper Exhibition of the company can take place. It helps to ensure a proper balancing out of various functions in the best possible way. It is equally helpful for the growth of the organization and the long run. All of these functions must be maintained by the company at every cost so that no outside person is able to influence the Dynamics of the company. 


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